The health care crisis and Obama’s plan to deal with it -- try covering that one in the space of 3 minutes! (That's all the time I had for my report in the "A Time for Change: The Obama Agenda" special.) Insurance, access to care, cost, and quality all factor into the problems with health care today, and Obama’s solutions will have to address all of those issues. So rather than give a laundry list of health care challenges, I decided to focus on one: cost.
Health care costs are out of control. Did you know that in less than a decade, the country will spend about $13,000 per person on health care? As the outgoing HHS Secretary Michael Leavitt has said the current rate of spending “could potentially drag our nation into a financial crisis that makes our major subprime mortgage crisis look like a warm summer rain.” If what we’re going through now is a warm summer rain…I don’t think I have a big enough umbrella.
The rapid rise in costs would be slightly less worrying if, as a result of all this spending, we were seeing better outcomes for patients or better quality of care. But the bulk of the evidence suggests that we’re not. As the politicians and health care experts I spoke to for my package suggest, we don’t need to spend more for better care. At the same time, we can’t keep squeezing down costs the way we have in the past because clearly that hasn’t worked. We have to spend smarter.
The thought is that by spending more efficiently, we can improve quality and keep costs low, which will ultimately impact some of those other issues, like insurance coverage and access (which the new administration plans to tackle as well). Obama and his pick for HHS secretary, Tom Daschle, have their thoughts on how to reduce costs, which I mention in my story tonight (health IT, a federal health board, prevention). What do you think? What will it take to keep medical costs in check?
Comments
Ashley - You've made some interesting points. A friend of mine -- an ER doctor -- has made the same point about non-profit healthcare companies. We had an interesting discussion about it, and I'm not sure where I come down on the issue. Do you think for-profit companies should be banned? Or that non-profit companies should compete with for-profit companies?
Plan Administrator - I agree, there are efficiencies in our current system that clearly aren't passing through to consumers. I think part of the problem is the incentive structure. Another physician friend of mine has told me that her superiors have told her to order tests whenever possible. Why? Insurers pay for tests; they don't pay for patient education. Now, I know a lot of great doctors -- both my own physicians, and friends who are in practice -- who make a point of spending time with their patients, regardless of whether or not they'll make a dime. But that's not the way the system is set up, and I think that has probably contributed to the rise in costs. But, like you, I'm glad I'm not president and am not responsible for fixing the system!
Richard - Over the past few years, we've seen interest groups that historically have been at opposite ends of the opinion spectrum come together on health care (think AARP and the Business Roundtable). I think people realize how serious the issue is and are willing to come together to craft a solution. One hopes their efforts will actually produce results...
Ashley is on target!
Principle Factors of Health Care Reform Costs:
1)Identify factors which create DEMAND for health care and consider how to reduce DEMAND by:
a)Preventive programs for illness and injury.
b)Reduce industrial environmental hazards.
c)Comprehensive immunization programs.
d)Promote healthy life styles.
e)Teach rational health decision-making in schools.
2)Identify all the factors required in the supply of health care and match the capacity for supply with physical resources, labor, technology by:
a)Balancing adequate supply of physical resources.
b)Balancing adequate supply of labor.
c)Perceptive adjustments needed for rural care.
d)Promotion of best technology.
e)Measure quality, safety, outcomes.
f)Measure effectiveness of preventive measures.
g)Prevention of unintended consequences.
h)Pptimize supply costs.
REMEMBER:
1)Over supply drives unnecessary costs.
2)Under supply drives decline in quality and accessability.
3)Limited supply may lead to rationing of care which decreases cost, but adversly affects quality and outcome.
Funding Source:
It is becoming more and more evident that a change in the taxation system in the U.S. will be necessary to accomplish an efficent, cost-effective health care reform policy for every citizen.
After this economic collapse, serious thought should be given to a sales tax system (Consumer tax if you will) augmented by a basic minimal level tax for every citizen. The savings incurred just by administration savings would be horrendous. There would be no loop holes and corruptive intentions for self gain would be easer controlled and less occurring. Combined with the internal considerations of Supply / Demand economics I am optimistic that a system could be put in place.
For success, it is manditory that differences among the various recommended approaches to pay for health care reform, come to a unanamously supported single approach by the various players. They must set aside their differences and come to agreement on a plan that will serve the overwhelming majority of this nation.
There are three groups of consumers, each with their own thoughts on universal health care--- those that have none want some, those that have some want more and those that have more don't want less. With health care costs rising and corporate profits declining, I would expect a number of large employers currently offering health coverage to look to the health care plan as a way to reduce their coverage and thus their cost. It's the corporate way of the world-- first there were defined benefit plans; along came 401(k) plans where a match was much cheaper than the DB contribution--- that was the beginning of the end of DB plans; next came the elimination of the 401(k) plan match. The feds wanted to creat a retirement vehicle for those who had none. They did and many of those who had more--a DB plan-- ended up with, in effect, a tax deferred savings account.
But you wanted to focus on cost and say that maybe more efficient spending can keep costs down. The following is an from an actual example of a 30 minute out-patient procedure although the costs are rounded (not materially)---
Doctor's billed cost $1,520
Insurance Carrier's Reasonable & Customary $1,440
Doctor's Preferred Provider contract $690.
If this procedure were performed on a person with no health insurance, the cost would be $1,520. If the procedure were performed on a person with an indemnity health plan, that person would be reimbursed by their plan's insurance benefit percentage applied to the R&C of $1,440. If that benefit is 90%, the doctor gets $1,520 of which $1,296 is paid by the carrier and $224 is paid by the individual. If the doctor is in the carrier's preferred provider network, the doctor gets $690 from the carrier (per his/her contract) and the individual pays maybe $10 or $20.
So who spends more efficiently? A doctor charges $1,520 for a procedure but per a contract, will perform that same procedure for $700. The individual will surely go to the network provider (by the way, all of the top hospitals and doctors/surgeons are in our network) and pay $10 rather than $288. That's effiecient. We can't blame the insurance carrier--- they set an R&C for a procedure and they negotiate deep discounts with the doctors. That's efficient. The doctors are willing to accept almost 50% less for a procedure. That's efficient. Our health plan is experience rated, has over 80% of Preferred Provider usage, and has over 60% of prescriptions filled using generic drugs...but we still experience close to double-digit increases every year.
I don't think spending more efficiently is the solution. There must be inherent problems with each element of healthcare system, from the doctors/hospitals, to the carriers, to the consumers. In the case of our plan---we're making use of all the discounts available and our population has remained constant---the only reason for increase in experience is usage. Maybe people are going to the doctor more often because it's so cheap and maybe the doctors are scheduling more visits. If they're charging half the price, the only way to get back to even is to schedule twice the visits.
What's the solution? I don't have a clue. That's why I don't want to be President.
This is so serious, right now, unlike any of the other civilized nations, people who must have a volume ventilator who are highly viable people, at home, to breathe and live are being denied them by the for-profit vendors (oxygen, breathing equipment, etc) apparently to boycott competitive bidding. This is those who survived Polio, have Muscular Dystrophy, MS, ALS, etc. What a crime. That's what happens when the for-profit sector takes over a life-sustaining service in a country.
The legislature knows about this, and CMS and DHHS knows this too, but we're letting our people die. This is humane America? When the Bail-Out Mystery surfaced, why didn't everyone realize that each person in America could have easily had excellent health care instead of the corporate crooks?
Correction: by 40% -
The costs would be cut by 4-% overnight if the for-profit middlemen" companies were removed from healthcare, and that doesn't include the pharmas and for-profit clinics and hospitals. Nader put it right on target, and thus far even Obama's ignored his wisdom. There is no doubt about it, no one wants to confront this issue, this serious situation that is against humanity, to stop the wasting of money. Simply put, as on Frontline, no one in healthcare should be a for-profit company. There will be plenty of business left for those choosing to add frosting to the cake on luxurious add-on insurance coverages. Right now, if we cannot decide in America, pick one of the 7 countries plans (see Frontline's coverage) and copy it.
This can all be done without "government overrule" by letting CMS purchase durable goods directly from manufacturers (see the Japanese segment), and then providing for licensed healthcare professionals to carry out health care. Right now, there are so many non-medical, unlicensed vendors delivering "healthcare products," supplies, services across the nation, and the consumers think these blokes are medically-trained. Stop them. The OIG has stated this over and over again, like why not by drugs directly from the drug companies! No intermediaries. Let's get real.